Retailers want online market places to pay VAT

Retailers are calling for legislation to make online market places liable to collect VAT and duties, to counteract the level of spend that is leaving the country.

Lorraine Higgins, Deputy Chief Executive at Retail Excellence Ireland, said two thirds of online spend is leaving Ireland, and retailers here are aggrieved by competition from online retailers based outside the state who do not have to pay duties.

"First and foremost we need to look at the online market places, and the fact that they don't have any duty on them," she said. "So what we'd like to see is robust legislation introduced in the upcoming budget that make online market places jointly and separately liable to collect VAT and duties."

Ms Higgins was reacting to mixed figures in retail during the fourth quarter of last year. A report produced by Grant Thornton for the industry group describes the fourth quarter as a "challenging one" for the sector.

The deputy chief executive of REI said there is a huge degree of volatility in the industry since the Brexit poll. "There is certainly no definitive trend emerging."

Percentage sales were down in October, while they picked up in November as a result of Cyber Week. Sales were up in December over Christmas by 2.5%. She said retailers "were investing heavily in marketing campaigns to try and offset the type of cheap imports that were coming from websites, predominantly outside of the EU".

She said the industry is seeing is an elongation of the shopping period at Christmas time, and a lot of retailers have stepped up to the mark and offered bargains, deductions and discounts in November, in order to try and encourage people into stores, to offset the challenges coming from websites outside of Ireland.

Retail Excellence Ireland is calling for a measure similar to the one introduced in the Finance Act in December in the UK, where online market places were made responsible for collecting VAT and duties. "We think that we should expect no less here in Ireland, because it's not enough in budgets to just increase consumer spend and think that takes care of retail," Ms Higgins said. "We need retail focused solutions for the future."

She said the future is bright for the retail industry but legacy issues such as housing need to be addressed. "We can see more people back at work, we can see increases in salaries but we see a situation where rents are increasing all of the time. Obviously, financial obligations are the first that consumers are going to meet, and they won't be spending in retail, unfortunately, if that happens."